Microsoft’s 69B Activation Agreement Defends Tech Industry Ties to Judgment


SAN FRANCISCO (AP) — The fate of what could be the most expensive merger in the history of the technology industry is now in the hands of a federal judge who must decide whether Microsoft should close its deal to buy video game company Activision Blizzard.

Federal antitrust enforcers have filed a lawsuit to block a $69 billion acquisition between Microsoft and game industry rivals such as Sony and Nintendo that they say will hurt competition.

And much of the decision may hinge on one Activision blockbuster franchise, the Call of Duty game, and whether Microsoft could hurt competition by controlling how it’s distributed to players.

“This is all a video game for a shooter,” U.S. District Judge Jacqueline Scott Corley hinted angrily at the nature of the dispute near the end of a five-day trial in San Francisco. We’re concerned about this shooter video game competition.

Microsoft had the upper hand in court proceedings that ended Thursday, with CEO Satya Nadella and other executives called to testify about the merger, including longtime Activision Blizzard CEO Bobby Kotick.

The Federal Trade Commission, which enforces antitrust laws, has asked Corley to issue an injunction temporarily blocking Microsoft and Activision from closing the deal before an FTC domestic judge can review it in an August hearing.

Both Microsoft and Activision have indicated that such a delay would force them to abandon the agreement they signed 17 months ago. Microsoft has promised to pay Activision a $3 billion breakup fee if the deal doesn’t close by July 18.

“The relief the FTC is seeking is not only unprecedented, it’s a deal-killer,” Microsoft’s lead attorney, Beth Wilkinson, said in a final written defense filed Thursday.

The case was It’s an important test for the 2021 investigation into the FTC’s technology industry chairman, Lena Kahn, installed by President Joe Biden, because of the strong position that tech giants like Amazon, Google and Facebook consider to be the sole characteristic of parent meta. The FTC’s bankruptcy could be a repeat of what happened earlier this year, when another judge rejected the FTC’s attempt to stop regulating virtual reality fitness company Meta.

Corley expressed skepticism about the FTC’s argument, particularly when on Thursday she stopped the agency’s lead attorney and asked him to explain “exactly what the harm is” to consumers.

“Why not be a little more precise?” Corley said. “It’s not the damage to Sony that we’re worried about,” she added later. It is the damage to the consumer.

Sony, a vocal opponent in the gaming industry, has told regulators it fears Microsoft will lose its dominant PlayStation game console to popular blockbusters like Call of Duty or offer subversions of those titles to drive players to desert PlayStations. Microsoft Xbox System.

Nadella, Kotick and other Microsoft witnesses tried to dispel those concerns this week, arguing that it’s better for business to keep games like Call of Duty on multiple platforms, and that pulling it from PlayStation would respond to gamers.

Amy Hood, Microsoft’s chief financial officer, said: “The possibility of doing an Xbox-only Call of Duty was never reviewed or discussed with me, nor was it even mentioned in any of the presentations or discussions with the board of directors.” Testimony given before Thursday’s court hearing. Hood was in court Thursday but was not asked to take the stand.

James Weingarten, the FTC’s lead attorney on the case, on Thursday sought to play down his comments that Microsoft has little interest in exclusivity of games. Weingarten represented a financial executive at Microsoft’s Xbox division about the company’s internal strategy discussions for Activision’s acquisition of Blizzard, as well as its $7.5 billion acquisition of another top game maker, Zenimax, in 2021.

After the Zenimax deal was first announced in 2015, Xbox Chief Financial Officer Tim Stewart said: Speaking at a 2020 investor conference, asked about the revival, Microsoft’s long-term plan is to differentiate its platform by making the game “first or better.” Or the best.

Stewart confirmed that there were internal discussions about how the reduction in sales from making games exclusively for Xbox would be offset by the money available from selling additional Xbox consoles and Microsoft Game Pass monthly subscriptions.

Microsoft has since made some ZeniMax games exclusive to the Xbox, such as the upcoming Starfield release. But in response to concerns about Activision’s deal, Microsoft offered to make binding agreements to keep Call of Duty on other platforms for at least a decade. Nintendo agreed to such a deal for the Switch console, but Sony declined.

Both Microsoft and the FTC held their closing arguments Thursday. Corley did not say when she would issue a decision, but said she was mindful of the timeliness of the issue.

The deal has faced opposition from another major regulator, the UK’s Competition and Markets Authority, but has been approved by other countries and the EU.



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